In brief: Management fees paid to a non-resident related company bear a withholding tax of 10% of the gross amount excluding VAT (Articles 15 and 19-IV-B of the CGI 2026) and 20% VAT, reverse-charged. They are deductible if the service is real, invoiced and priced at a normal level.
An intragroup recharge is reviewed on four levels: deductibility, withholding tax, VAT and transfer pricing. Between Moroccan companies, the 5% withholding depends on the status of the payer (Article 157-I) and on a threshold timetable running until 2028. MAD m = millions of dirhams.
The general framework is set out in our pillar article on transfer pricing in Morocco.
What the CGI 2026 says about intragroup management fees
Deductibility: Articles 10, 11 and 146
The law provides that « other external expenses incurred or borne for the needs of the business » are deductible (Article 10-I-B). Services « of a gratuitous nature » are not (Article 11-IV).
The service must be supported by « a regular invoice or any other probative document » (Article 11-III). Since the 2016 Finance Law, the purchase « must actually be carried out »; an invoice from an inactive company (Article 228 bis) is not deductible (Article 146).
Outside traceable means (crossed cheque, transfer, bill of exchange…) or set-off, the expense is deductible only up to MAD 5,000 per day and MAD 50,000 per month, per supplier (Article 11-II). Set-off requires « documents duly dated and signed by the parties concerned ».
Withholding tax on a non-resident provider: Article 15
Article 15 covers gross proceeds paid to non-residents, in particular studies « carried out in Morocco or abroad » (15-III), technical assistance and provision of staff (15-IV), fees (15-IX) and « services of any kind used in Morocco » (15-X).
The rate is 10% of the gross amount excluding VAT (Article 19-IV-B, 2013 Finance Law), subject to the applicable tax treaty.
The tax is withheld by the payer (Article 160) and paid within the month following payment (Article 171-I-A). A defaulting payer is « personally liable » for the sums, « whether or not the withholding tax was made » (Article 198).
The regime is detailed in our article on withholding tax on services supplied by foreign providers.
Withholding tax on a resident provider: Articles 15 bis, 157-I and 247-XXXXVI
Article 15 bis covers « fees, commissions, brokerage and other remuneration of the same nature » (2023 Finance Law). The rate is 5% excluding VAT for a legal entity subject to corporate tax (IS) (Article 19-IV-A) and 10% excluding VAT for an individual under the RNR or RNS regime (Article 73-II-B-8°).
For a legal-entity beneficiary, only the payers of Article 157-I withhold: the State, local authorities, public establishments and enterprises and their subsidiaries, banks, insurers, and companies above a turnover threshold (excl. VAT, last closed financial year) set by Article 247-XXXXVI (2026 Finance Law):
| Payments made | Turnover threshold excl. VAT | Legal basis |
|---|---|---|
| From 01/07/2026 | ≥ MAD 500m | Art. 247-XXXXVI |
| From 01/01/2027 | ≥ MAD 350m | Art. 247-XXXXVI |
| From 01/01/2028 | ≥ MAD 200m | Art. 247-XXXXVI and 19-IV-A |
The withholding is « creditable against the amount of corporate tax or income tax, with right to refund » (Article 157-I). It is paid before the end of the month following the withholding (Article 174-V). The withholding tax tool can be used to check a given payment.
| Provider | Rate | Who withholds | Legal basis |
|---|---|---|---|
| Non-resident company | 10% of gross excl. VAT | Any payer in Morocco | Art. 15, 19-IV-B, 160 |
| Resident company subject to IS | 5% excl. VAT | Payers under Art. 157-I only | Art. 19-IV-A, 157-I, 247-XXXXVI |
| Individual under RNR or RNS | 10% excl. VAT | Legal entities and individuals under RNR or RNS | Art. 73-II-B-8°, 157-I |
Transfer pricing: Articles 213 and 214
Between related companies in Morocco or abroad, profits transferred through prices « or by any other means » are added back to the result, by comparison or by direct assessment (Article 213-II, 2009 Finance Law).
For transactions with related companies outside Morocco, a master file and a local file are required from MAD 50m of turnover excl. VAT or gross assets (Article 214-III-A, 2019 and 2021 Finance Laws). They must be available when the audit starts (Article 210). Failing that, the dependence link « is presumed to be established » (214-III-C) and the fine is 0.5% of the transactions, minimum MAD 200,000 per financial year (Article 185-IV). An advance agreement can fix the method for 4 financial years at most (Article 234 bis).
VAT: Articles 88, 115, 117 and 92
A service « exploited or used in Morocco » is taxable there (Article 88-2°), at 20% (Article 99-A), costs included (Article 96). Without a representative of the foreign provider, the taxable customer reports the amount excluding tax, computes the VAT and « at the same time makes the deduction » (Article 115, 2014 Finance Law). A customer outside the scope withholds the tax and pays it the following month (117-III). See our article on VAT reverse charge.
Between residents, Article 117-V provides for a VAT withholding of 75% on a list of services set by regulation. Its point c), created by the 2026 Finance Law, covers banks, insurers and companies above the threshold of Article 247-XXXXVI that pay legal entities; without a tax compliance certificate, the withholding is 100%.
Conversely, a Moroccan company invoicing a service used outside Morocco is exempt with right to deduct, on an invoice in the name of the foreign customer and payment in foreign currency (Article 92-I-1°).
Key takeaways:
- In Morocco, management fees paid to a non-resident company bear a withholding tax of 10% of the gross amount excluding VAT (Articles 15 and 19-IV-B of the CGI 2026, rate from the 2013 Finance Law).
- The 5% withholding excl. VAT on a resident company is made only by the payers of Article 157-I of the CGI 2026, with a threshold of MAD 500m from 01/07/2026, MAD 350m from 01/01/2027 and MAD 200m from 01/01/2028 (Article 247-XXXXVI, 2026 Finance Law).
- Transfer pricing documentation is required from MAD 50m of turnover excl. VAT or gross assets for flows with related companies outside Morocco (Article 214-III-A of the CGI 2026); fine of 0.5%, minimum MAD 200,000 (Article 185-IV).
What the tax authority specifies: Circular Notes 717, 731, 733 and 737
Deductibility (CN 717, volume 1). The administration specifies that the expense must serve the business, be effective, supported, recorded in the accounts and reduce net assets (p. 126). Fees under a technical assistance agreement, including « the development of management methods », are external expenses (p. 137). A gratuitous expense is « any expense incurred outside the interest of the company » (p. 187).
Technical assistance (p. 204-205). Assistance commits the foreign company to an objective; provision of staff is a « time-based hire of staff ». For a study carried out partly abroad, the whole remuneration is subject to withholding. The rates quoted in this passage are outdated: only the 10% rate of the CGI 2026 applies.
Recharges abroad (p. 32-33). Administrative services (accounting, general management) and the share of head-office costs that a Moroccan company recharges to its foreign establishments « remain subject to IS in Morocco ».
Indirect profit transfer (CN 717, volume 3, p. 212-216). Dependence is direct (parent and subsidiaries), indirect (subsidiaries of the same group) or de facto. The forms of transfer include « bearing excessive or fictitious management costs ». The circular refers to Article 9 of the OECD and UN models: conditions « other than arm’s length ».
Scope of Article 15 bis (CN 733, p. 81). « Remuneration of the same nature » covers advice, expertise, « assistance and support », marketing and « accounting and administrative management ». Sales of goods, works and transport are outside the scope.
2021 and 2026 Finance Laws (CN 731, p. 20-21; CN 737, p. 58-60). CN 731 limits documentation to companies above MAD 50m. CN 737 confirms the addition of banks, insurers and companies under the MAD 500m / 350m / 200m timetable, and requires a statement of remuneration attached to the return under Article 151-I. For the 117-V-c VAT withholding, Decree No. 2.25.1041 of 15/12/2025 refers to list B of Decree No. 2-06-574.
Disbursements for VAT (CN 717, volume 2, p. 122 and 125). Disbursements that are supported and shown separately at cost are outside the base; a flat-rate price is taxable in full.
Key takeaways:
- Circular Note No. 717 (volume 1, p. 137) classifies technical assistance fees, including the development of management methods, as external expenses under Article 10-I-B of the CGI.
- Circular Note No. 717 (volume 3, p. 212-213) cites « bearing excessive or fictitious management costs » as an indirect profit transfer (Article 213-II of the CGI).
- Circular Note No. 733 (p. 81) includes assistance and administrative management in the scope of the Article 15 bis withholding tax.
Cases decided by the DGI on intragroup recharges
These are individual rulings, of indicative scope for third parties. Those issued before 2007 predate the CGI: their reasoning is transposed to the CGI 2026.
Ruling No. 005/2017 of 02/01/2017: travel costs go through the parent
Ruling. The parent’s staff carried out assignments remunerated as management fees; the subsidiaries paid their travel costs. The DGI treated these costs as an indirect cost of the service, « deemed to constitute turnover of the parent company ». To be deductible for the subsidiaries, they must be invoiced by the parent, with documents supporting the principle and the amount.
Scope. Transposable under Articles 10-I-B, 11-III, 146 and 213-II.
Ruling No. 221/2016 of 07/06/2016: qualify service by service
Ruling. Under the AMU convention, the DGI qualified market studies and marketing as royalties, subject to withholding in Morocco. Sales management (prospecting, administrative sales management) falls outside this definition: no withholding.
Scope. Qualification is made service by service. The solution applies to the AMU convention only; elsewhere, subject to the applicable tax treaty.
Ruling No. 165 of 01/03/2000: the 2% cap on head-office costs
Ruling. The DGI recalled that the doctrine of the time limited the share of head-office costs of a permanent establishment to 2% of its turnover, on an approved statement, a share subject to VAT.
Scope. The 2% cap is absent from the CGI 2026 and only covered permanent establishments of non-residents, not subsidiaries (Article 213-III today).
Rulings No. 403 of 02/10/2003 and No. 295 of 29/03/2004: costs are part of the base
Ruling. The DGI applied the withholding to « the whole … including the costs incurred », then linked reimbursements of travel and accommodation costs under technical assistance to the applicable convention, and failing that to the withholding on gross proceeds.
Scope. Articles 15-IV and 19-IV-B: recharged costs are included in the base.
Rulings No. 65 of 19/02/2003, No. 262 of 28/08/2003 and No. 8 of 07/01/2004: exchange control, VAT and free zone
Approval by the Foreign Exchange Office does not exempt from the 10% withholding (No. 65; Articles 160 and 171-I-A). Foreign technical assistance bears the withholding and 20% VAT (No. 262), reverse-charged since the 2014 Finance Law (Article 115). A subsidiary in a free zone, today an industrial acceleration zone, also withholds the 10% (No. 8).
Ruling No. 621/2010 and March 2017 ruling: mixed contracts and set-off
The withholding only applies to the services part of a mixed contract (No. 621/2010). Set-off is an accepted means of payment, on dated and signed documents (March 2017); only the MAD 5,000 / 50,000 caps apply today.
Key takeaways:
- In its ruling No. 005/2017 of 02/01/2017, the DGI requires the travel costs of the parent’s staff to be invoiced by the parent in order to be deductible for the subsidiaries.
- In its rulings of 02/10/2003 and 29/03/2004, the DGI includes recharged costs in the base of the 10% withholding (Articles 15-IV and 19-IV-B of the CGI 2026).
- The 2% cap on head-office costs, cited in ruling No. 165 of 01/03/2000, is a doctrine absent from the CGI 2026, limited to permanent establishments of non-residents.
Application in 2026: worked example of MAD 2,000,000 of management fees
Assumptions. Moroccan subsidiary F: turnover excl. VAT of MAD 300m, profit below MAD 100m, IS at 20% (Article 19-I-A). Foreign parent M with no establishment or representative in Morocco. 2026 management fees: MAD 2,000,000 excl. VAT. F also paid MAD 150,000 of travel costs of M’s teams.
| Step | Calculation | Amount | Basis |
|---|---|---|---|
| 1. Costs recharged by M | 2,000,000 + 150,000 | MAD 2,150,000 excl. VAT | Ruling No. 005/2017; Art. 10, 11-III, 146 |
| 2. Withholding tax | 10% × 2,150,000 | MAD 215,000 | Art. 15-IV/X, 19-IV-B, 171-I-A |
| 3. Reverse-charge VAT | 20% × 2,150,000 | MAD 430,000, deducted at the same time | Art. 88-2°, 99-A, 115 |
| 3a. If F were outside the scope of VAT | VAT withholding | MAD 430,000 | Art. 117-III |
| 4. Documentation not produced | 0.5% × 2,150,000 = MAD 10,750 | MAD 200,000 (minimum) | Art. 214-III-A, 185-IV |
| 5. Hypothetical add-back | (2,150,000 − 1,500,000) × 20% | MAD 130,000 of IS | Art. 213-II, 19-I-A |
Step 5 assumes a normal price of MAD 1,500,000, excluding penalties (Article 208). No treaty rate is used.
Domestic variant. Moroccan holding company H invoices MAD 2,000,000 excl. VAT of management fees to F (assistance and administrative management: scope of Article 15 bis, CN 733 p. 81).
| F’s situation | 5% withholding | Basis |
|---|---|---|
| Turnover MAD 300m, payments in 2026 and 2027 | None (thresholds of MAD 500m then 350m) | Art. 247-XXXXVI |
| Turnover MAD 300m, payments from 01/01/2028 | MAD 100,000 | Art. 19-IV-A, 157-I, 247-XXXXVI |
| Turnover ≥ MAD 500m, payments in H2 2026 | MAD 100,000 | Art. 247-XXXXVI |
The withholding is creditable against H’s corporate tax, with refund. The VAT withholding of Article 117-V-c would give 75% × 400,000 = MAD 300,000 if F exceeds the threshold and if the service appears on list B of Decree No. 2-06-574, a point not settled here.
Key takeaways:
- For MAD 2,150,000 excl. VAT invoiced in 2026 by a foreign parent, the withholding is MAD 215,000 (10%, Article 19-IV-B of the CGI 2026) and the reverse-charge VAT MAD 430,000 (20%, Article 115).
- A subsidiary with MAD 300m of turnover that does not produce its documentation incurs the minimum fine of MAD 200,000 per financial year (Article 185-IV of the CGI 2026).
- Between Moroccan companies, a subsidiary with MAD 300m of turnover withholds the 5% only from 01/01/2028 (Article 247-XXXXVI of the CGI 2026).
Points to watch in a tax audit
- No 5% withholding for everyone. Only the payers of Article 157-I withhold. For companies, the MAD 200m threshold only applies from 01/01/2028; before that, MAD 500m then 350m (Article 247-XXXXVI).
- Point c) of Article 117-V. It dates from the 2026 Finance Law, not the 2024 Finance Law.
- 2% cap. Old doctrine for permanent establishments, absent from the CGI 2026: not a legal rule, not applicable to subsidiaries.
- Tax treaties. The qualification (royalty, technical assistance or business profits) and any reduced rate are assessed subject to the applicable tax treaty.
- « Arm’s length ». The expression comes from administrative doctrine and the OECD, not from Article 213-II; the OECD methods are not codified in Morocco.
- Flows between Moroccan companies. No mandatory master file or local file (Article 214-III-A), but Article 213-II applies.
- Not settled by the texts reviewed. The regulatory list of documentation items, the margin on intragroup services and the fate of withholding paid on an added-back portion.
Key takeaways:
- A subsidiary withholds 5% on its resident holding company only if it is listed in Article 157-I of the CGI 2026 (MAD 500m / 350m / 200m timetable, Article 247-XXXXVI).
- The master file and local file of Article 214-III-A of the CGI 2026 only cover flows with related companies located outside Morocco.
Frequently asked questions
Are management fees paid to a foreign parent company deductible in Morocco?
Yes, if three conditions are met: the service is real and incurred for the needs of the business (Article 10-I-B of the CGI), it is supported by a regular invoice (Articles 11-III and 146) and its price does not transfer profit (Article 213-II). Otherwise, the expense is added back as a gratuitous expense (Article 11-IV) or as indirectly transferred profit.
What withholding tax applies to management fees paid abroad?
10% of the gross amount excluding VAT (Articles 15-IV and 15-X, 19-IV-B of the CGI), withheld by the Moroccan payer and paid within the month following payment (Articles 160 and 171-I-A), subject to the applicable tax treaty. Recharged costs are included in the base (DGI rulings No. 403 of 02/10/2003 and No. 295 of 29/03/2004).
Must a Moroccan subsidiary withhold 5% on management fees invoiced by its Moroccan holding company?
Only if the subsidiary is a payer under Article 157-I: public body, bank, insurer, or company above the turnover threshold of Article 247-XXXXVI (MAD 500m from 01/07/2026, MAD 350m from 01/01/2027, MAD 200m from 01/01/2028). The withholding is creditable against the holding company’s corporate tax, with right to refund.
Does VAT apply to management fees from a foreign provider?
Yes, 20%, because the service is used in Morocco (Articles 88-2°, 89-I-10°-b and 99-A of the CGI). Without an accredited representative, the taxable customer reports the amount excluding tax, computes the VAT and deducts it at the same time (Article 115). A customer outside the scope of VAT withholds it at source (Article 117-III).
Which documents should be kept to defend management fees in a tax audit?
The service agreement, detailed invoices, evidence of performance and the pricing method (DGI ruling No. 005/2017). Above MAD 50m of turnover or gross assets, with foreign related entities: master file and local file (Article 214-III-A). Failing that: presumed dependence (Article 214-III-C) and a fine of 0.5%, minimum MAD 200,000 (Article 185-IV).
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